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Calculation of personal income tax to foreign contractors

Thu, 23 Feb 2017 16:08:53 PM GMT + 7    Print   Email   Share:

(Chinhphu.vn) - Contracts with contractors and subcontractors include many different business activities, the utilization of company income tax rate is calculated on taxable revenue when determining the payable company income tax based on it’s revenue for each business activity.

Binh Duong Tax Department guides Vietnam Liang Chi II Industry Co., Ltd. To identify the Company income tax to apply to foreign contractors as follows:

Point b, Clause 2, Article 13 of Circular No. 103/2014 / TT-BTC dated 06/08/2014 of the Ministry of Finance guiding the implementation of tax obligations that is applicable to foreign organizations and individuals who are doing business in Vietnam or arising incomes in Vietnam stipulated:

 “b) Proportion (%) of company income tax calculated on the taxable income for some specific cases:

b.1) Contracts  with contractors and subcontractors which include many different business activities, the utilization of companies income tax rate is calculated on taxable revenue when determining the payable companies income tax based on it’s revenue for each business activity by foreign contractors and foreign subcontractors performed as specified in the contracts. In case the separation of each business activity’s value is impossible to implement, it shall apply the company income tax rate to the business sectors that have the highest company income tax rate for the whole value of the contract s".

Pursuant to the above provisions, the Company incurred the contracts with the contractors if in the contracts, the separation of each business activity’s value is possible to implement, the percentage (%),of company income tax on the tax calculation turnover to the service is 5% and income from royalties is 10%.

 

By: Thanh Thuy (National Competition) / Translator: HaiYen-Bizic

 

  • By : Thanh Thuy (National Competition) / Translator: HaiYen-Bizic

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